Will Cloud Computing Be To Labor What The Internet Was To Capital?
In 1992, the CME Group launched the first electronic trading platform, which heralded a completely new age for anyone with capital to spare. Electronic trading and money transfers meant a whole new world of opportunity for potential investors.
In essence, the Internet freed wealthy (and even not-so-wealthy) investors to move their money wherever they wanted, whenever they wanted, at a negligible cost. The result has been hedge funds, day traders, a huge uptick in emerging market investments, and a veritable explosion of highly complex “financial instruments.” (Plus, grandpa gets to trade stocks at home.)
And the ultimate effect? The past two decades have been a boon for capital (i.e. people with money to spare) but less than stellar for labor (people who work for a living). As evidence, take the United States:
Median hourly wages (adjusted for inflation) have remained virtually flat since 1992, while the networth of the top 10% of households has grown from an inflation-adjusted average of $1.8 million to $4.2
million (a 133% increase).
But is it possible that cloud computing could reverse the trend? Answering that requires a clear understanding of capital’s current advantage over labor: Investors can fling their investment dollars around the world to find the best opportunities at virtually zero cost. Labor, on the other hand, has much less freedom to move to wherever demand is highest, especially when that demand is in another country.
Thankfully—for labor—that’s an area in which cloud computing is already transforming the marketplace.
Cloud-based communication and collaboration software, online workplaces like eLance/Guru/GetACoder, and even educational platforms are all working together to give many potential employees (mostly knowledge workers) the opportunity to send their labor to wherever demand is highest.
For example, a quick survey of elance job contractors shows the following:
- Bangladeshi mobile app developers earning $12/hour.
- Belize-based database administrators earning $35/hour.
In each of these cases, workers are earning far more money for their labor than they typically could locally in their home countries. Most of these workers are also being employed by small business owners who would never be able to launch their startups without access to such competitive labor rates.
But on the flipside, cloud computing makes the outsourcing of knowledge workers to cheaper markets easier than ever. A small business in the United States looking to employ the above contractors locally could easily pay $75/hour for a developer, $40/hour for a writer, and as much as $100/hour for a database consultant.
Nevertheless, the US Bureau of Labor Statistics has shown that local demand for most knowledge worker positions continues to rise. BLS estimates project employment increases of 31% for database administrators, 30% for software developers, and 17% for technical writers over the next 10 years.
Such statistics offer little comfort to workers who’ve recently been laid off or who find themselves bidding on contracts in an online workplace that pay far less than they’re used to. But ultimately, cloud computing offers workers the opportunity to move their labor from one market to another just as efficiently as investors can move their capital. In the short-term, that could cause some pain in the developed world (along with a wave of easy money in developing nations), but a longer view suggests a net win for the world’s educated workers.
By Robert Shaw